Hallmark Health System may be moving closer to a merger with Partners HealthCare. Last spring, the company — which owns Melrose-Wakefield Hospital, Lawrence Memorial Hospital and several offsite locations in Malden, Stoneham, Reading and Wakefield — entered into a memorandum of understanding with Partners HealthCare, which owns Brigham and Women’s Hospital and Massachusetts General Hospital.

Nicholas Iovino & Lisa Guerriero/ melrose@wickedlocal.com

Hallmark Health System may be moving closer to a merger with Partners HealthCare.

Last spring, the company — which owns Melrose-Wakefield Hospital, Lawrence Memorial Hospital and several offsite locations in Malden, Stoneham, Reading and Wakefield — entered into a memorandum of understanding with Partners HealthCare, which owns Brigham and Women’s Hospital and Massachusetts General Hospital.

Alan Macdonald, Hallmark Health’s executive vice president for strategy and external affairs, said the two health care organizations are exploring how they might work together under the new federal Patient Protection and Affordable Care Act, commonly referred to as “Obamacare.”

“We’re taking a look at what the future is for health care and saying, ‘We want to continue to provide care for the communities we serve,’” said Macdonald.

Macdonald said Hallmark Health is not considering selling its hospitals.

While Hallmark engaged in talks with other hospital systems over the last few years, Macdonald said the agreement signed last spring ensures exclusive discussions between Hallmark and Partners.

Because of intense pressure to find efficiencies in health care, especially under a new federal health care reform law, Macdonald said there is always pressure to do more with less.

“The benefit to the system is providing more care in the community at a much lower overhead,” he added.

Effect on Melrose

Mayor Rob Dolan said Hallmark Health officials have come to him several times to update him on their discussions with Partners. He believes teaming up with a larger medical company would benefit not only Hallmark but also Melrose.

“To run a smaller hospital is incredibly difficult,” he said. “Melrose-Wakefield Hospital would benefit from being part of the Partners network.”

Dolan said these days, smaller hospital organizations have two choices if they want to stay competitive: to expand or to partner with a larger medical network.

Expansion is feasible, but hard to accomplish without a partner, he added, citing firsthand experience — prior to being elected mayor, he was the director of housing and community services for the East Boston Neighborhood Health Center, and witnessed that organization’s struggles in the mid-1990s.

A merger or partnership would allow Hallmark Health to further invest in things like capital improvements, according to the mayor.

“Being part of the Partners network is the only way they can do that,” he said.

Hallmark Health is the single largest employer in Melrose — Dolan estimates it provides roughly 500 to 600 jobs.

Macdonald said while the potential exists for some jobs to be lost through attrition or for some administrative consolidation to take place under a new merger, he does not foresee any major layoffs resulting from the partnership.

“It’s quite possible we would increase numbers over time because the potential would be for more volume if we merge with a tertiary that provides health care in an urban setting,” said Macdonald. “They would be coming to [Hallmark Health’s hospitals] instead of [Boston] so volume might increase.”

The mayor said although a partnership with a larger company might mean losing some administrative positions at Melrose-Wakefield Hospital, he believes job loss would be minimal — and necessary if Hallmark Health is going to survive and thrive.

Dolan noted how far the hospital system has come since he became mayor, about 10 years ago. At that point, he said, Hallmark was struggling with difficult budgets, ailing infrastructure and a low bond rating. After many local medical facilities had closed, including Malden Hospital and Boston Regional Medical Center in Stoneham, it was a popular rumor that Melrose-Wakefield Hospital would be next.

He credits Hallmark Health President and CEO Michael Sack, along with his staff, with transforming the organization into a medical network that’s marketable to “what could arguably be the greatest health care system in the world, which is Partners.”